Divergence - The Nematode Genomics Company

Article courtesy of the St.Louis Post Dispatch.

FIRMS HOPE RESEARCH PAYS IN MORE WAYS THAN ONE

Virginia Baldwin Gilbert
Of The Post-Dispatch
St. Louis Post-Dispatch (MO)
March 26, 2001
Section: BUSINESS PLUS
Edition: FIVE STAR LIFT
Page 8

Some startup life science companies in St. Louis are poised to turn the projects they are working on into developments that will change the world and make them financial success stories.

Researchers are working to make the transition from scientists to entrepreneurs in labs across the St. Louis area. For some, the challenge is shifting from academia to industry. For others, it's raising money.
All are hoping their discoveries will improve not only the world, but also their bottom line.

Here is a closer look at four of them:

SYMBIONTICS INC.: Developing good parasites

At the moment, Jon LeBowitz doesn't find his work at Symbiontics Inc. to be too different from his academic research.

"But that will change quickly as we grow in the next year," said LeBowitz, who runs the company's research operation. "The objective we're trying to achieve is focused on producing something we can sell for a profit. That requires a slightly different mind-set."

LeBowitz is on a leave of absence from Purdue University, where he is a tenured professor. He was lured here by Stephen Beverley, with whom he had worked as a post-doctoral fellow at Harvard Medical School 10 years ago. Beverley is now the chairman of the department of molecular microbiology at Washington University School of Medicine.

Symbiontics is developing certain single-cell organisms to live inside the human body and provide vital proteins that some people lack. Researchers want to take advantage of the biological relationship known as symbiosis, whereby parasites and their hosts each provide an advantage to the other.

Symbiontics' method involves changing the genes of the organisms, called protozoa, instead of changing the genes of the patient.

If you modify the gene of the vector -- the organism carrying the trait you want -- you can tinker with or reverse the process by removing the organism.

Symbiontics researchers want to deliver proteins called enzymes that are essential to bodily functions such as digestion or respiration. The lab is focusing on a parasite that heads for one of the sites in human cells where enzymes do their work -- where they break down large molecules into parts that a cell can use or discard.

Some 40 human diseases are associated with a lack of various enzymes needed in this part of the cell. Only one of the diseases, Gaucher's Syndrome, has a commercially available enzyme-replacement treatment.

Developing such a treatment is a long process. In the short term, Symbiontics is developing the one-cell creatures to be outside-the-body factories of proteins. The researchers believe their protozoan factories could be cheaper and safer than the present method of using mammal cell cultures.

Beverley and Dennis Vaccaro founded Symbiontics in July 1996, and Beverley moved here in 1997.

Vaccaro, now the chief executive, remains in Boston, but the founders decided to base the company in St. Louis' Center for Emerging Technologies, 4041 Forest Park Avenue.

"We couldn't do what we're doing here if we were in Boston," LeBowitz said. "The rent here is so cost-effective, compared to Boston or the (San Francisco) Bay Area where the bulk of biotech is."

The company now has six full-time employees. Symbiontics has licenses on four patents issued or pending -- three from Harvard and one from Washington University. And more patents are on the way. It has raised $1.2 million so far, and is hopeful that more money is on the way, too.

STEREOTAXIS INC.: A promising medical device

Another resident of the Center for Emerging Technologies, Stereotaxis Inc., has more than 100 patents issued or pending.

Stereotaxis is ahead in getting investors as well. It has raised about $50 million so far.

"We have enough money to last us about 18 months, an exceptionally long period for an emerging company," said Chief Executive Bevil Hogg.

With the uncertainties of the stock market and venture capitalists' tighter fists, Hogg said he's glad his company is not seeking financing now.

"For companies that have money, things are no different than they ever were. We have a job to get done: to develop new medical technologies and commercialize them."

Stereotaxis is developing equipment that uses magnets to guide catheters inside the body. The technology promises to allow doctors to guide surgical, diagnostic or therapeutic devices to the deepest recesses of the brain or heart -- without the risk and invasiveness now associated with major surgery.

The technology was developed at the University of Virginia. The founders, Matthew Howard, now a professor at the University of Iowa, and Sean Grady, now chairman of neurosurgery at the University of Pennsylvania, talked to many institutions, looking for a place to continue their research.

Dr. Ralph G. Dacey of Washington University's medical school persuaded the company to come here. It moved into a suite at Barnes-Jewish Hospital in 1995 and has had offices in the Center for Emerging Technologies for nearly two years.

Researchers conducted the first very limited human trials in 1998. Currently, researchers are working with models of human hearts and brains, and conducting some clinical trials.

The clinical trial stage for medical devices is much less extensive than the procedures demanded of new drugs, Hogg said. "It requires years of evaluation and testing for pharmaceuticals. A medical device tends to work or not. If it works in a mouse, it will probably work in a human," he said.

The company expects to double the number of employees -- to more than 100 from 55 -- within the year.

ORION GENOMICS Inc. Understanding a plant's roots

Nathan Lakey, chief executive of Orion Genomics Inc. sees his company's research helping to solve world hunger and fuel shortages. Lakey is quick to add, "There's a tremendous market for this."

Orion was founded in 1998 by Richard Wilson and John McPherson, who are working on the Human Genome Project at Washington University, and Robert Martienssen and Richard McCombie, who work at Cold Spring Harbor Laboratory in New York.

Orion researchers are working on the genomes of plants, especially crops. The company has exclusive rights to technologies that "separate the junk from the genes," Lakey explained. The technology, called Gene Thresher, was invented at Cold Spring Harbor.

"A small percentage of the genome are genes," Lakey said. Most of the sequence elements "are repetitive junk DNA. We discovered junk DNA is chemically distinguishable from genes."

Quite apart from modifying the genes in a plant -- a process that has become controversial when used in food crops -- knowing the genetic expression of a plant helps a researcher breed better plants naturally.

As researchers seek to develop plants that are hardier, or more nutritious, or can be used for fuel or to make plastics, they need to know which genes cause which traits.

Lakey compares the process to finding a needle in a haystack. "Every time you go to the haystack to grab an item, it costs you. Our competitors have to grab nine pieces of straw before they find a needle. We can grab a needle every time. It's a five-to-50-fold advantage, depending on the crop."

Orion has eight employees and a host of part-time consultants. Three of the full-timers came to St. Louis from out of town, including Lakey, who left Millennium Pharmaceuticals Inc. in Cambridge, Mass., to join Orion. The company expects to hire 20 to 50 more by the end of the year -- bench scientists, computer programmers, accountants and other office staff.

Plant genetic research is a wide-open field at the moment, Lakey said. Only three years ago, 10 or 12 multinational companies were developing biotech products for agriculture. Now they've merged into four major companies, including Monsanto Co., a spinoff of the old Monsanto's merger with Pharmacia Corp. last year.

"When large companies are merging and being acquired, they tend to slow down their long-term perspective," Lakey said. "Their research focuses on the here and now."

So a small, nimble company like Orion can do the research, build the data sets, and sell alliances with the larger companies to develop specific products. But other projects are best developed without a partner, Lakey said.

"We've got great financial backing, a long list of private investors," Lakey said. The company has raised more than $5 million so far.

DIVERGENCE Inc. Early bird gets the worm?

While Orion is identifying plant genes to make better crops, Divergence Inc. is identifying worm genes to kill them more effectively.

Not quite 2 years old, Divergence is well-funded, having raised about $2 million. It recently hired Derek Rapp, the former director of mergers and acquisitions for the old Monsanto Co., as its chief executive.

Dr. James McCarter, president and founder of Divergence, is the group leader for parasitic nematode sequencing at the Genome Sequencing Center at Washington University.

"The real reason we're able to do this company is because of what's going on at the genome center," McCarter said, "We mine public sequence data (being generated at Washington University) that would take millions of dollars for the company to do alone."

Divergence operates out of a tiny, crowded lab near the sequencing center but plans to move soon.

Divergence is studying the genes of nematodes -- worms that cause disease in crops, animals and people. Nearly half the world's people are infected with nematodes, Rapp said.

Depending on the particular parasite, nematodes are "likely to stunt growth, inhibit the body's ability to absorb nutrients and lead to diseases like blindness and intestinal problems," he said.

But the first issue for Divergence is dealing with nematodes in crops. By 2005, methyl bromide, the main weapon against nematode crop pests, is supposed to be off the U.S. market because of its effect on the environment.

Divergence is racing against that deadline to find another, more environmentally friendly way to kill nematode pests.

"The issue is that these funny little worms have a good deal of genetic commonality, even with us," Rapp said. "So without the existence of a sophisticated technology like genomics, it's difficult to control."

Divergence's plan is to find something in the genes of nematodes that diverges from the genes of people and other animals. Researchers would then target that difference.

The company will be generating intellectual property rights -- patents that could be licensed to other, larger companies. But it also will be screening chemical compounds, looking for a knockout product.

"I can't imagine us going to development of a product -- field trials, the regulatory process, and then trying to market it. That's beyond our capabilities," Rapp said.

Instead, Divergence will look for a licensee or a partner.